Facts on the economy in Switzerland.
Switzerland is a peaceful, prosperous and modern market economy with low unemployment, a highly skilled labour force, and a per capita GDP among the highest in the world. Switzerland’s economy benefits from a highly developed service sector, led by financial services, and a manufacturing industry that specialises in high-technology, knowledge-based production. Its economic and political stability, transparent legal system, exceptional infrastructure, efficient capital markets and low corporate tax rates also make Switzerland one of the world’s most competitive economies.
The Swiss have brought their economic practices largely into conformity with the EU’s, to enhance their international competitiveness, but some trade protectionism remains, particularly for its small agricultural sector. The fate of the Swiss economy is tightly linked to that of its neighbours in the euro zone, which purchases half of all Swiss exports.
Effects of the 2008 global financial crisis
The global financial crisis of 2008 and resulting economic downturn in 2009 stalled export demand and put Switzerland in a recession. The Swiss National Bank (SNB) during this period effectively implemented a zero-interest rate policy to boost the economy as well as prevent appreciation of the Swiss Franc (CHF) and Switzerland’s economy recovered in 2010 with 2.7 percent growth. The sovereign debt crises currently unfolding in neighbouring euro-zone countries pose a significant risk to Switzerland’s financial stability and are driving up demand for the Swiss Franc by investors seeking a safe haven currency. The independent SNB has upheld its zero-interest rate policy and conducted major market interventions to prevent further appreciation of the Swiss Franc but parliamentarians have urged it to do more to weaken the currency. The franc’s strength has made Swiss exports less competitive and weakened the country’s growth outlook; GDP fell to 1.4 percent in 2011.
Pressure from neighbouring countries
Switzerland has also come under increasing pressure from individual neighbouring countries, the EU, the US, and international institutions to reform its banking secrecy laws. Consequently, the government agreed to conform to OECD regulations on administrative assistance in tax matters, including tax evasion. The government has re-negotiated its double taxation agreements with numerous countries, including the US, to incorporate the OECD standard, and in 2011 it reached deals with Germany and the UK to resolve outstanding issues, particularly the possibility of imposing taxes on bank deposits held by foreigners. These steps will have a lasting impact on Switzerland’s long history of bank secrecy.
Some basic Swiss economic facts
Labour force: 4.27 million
Country comparison to the world: 86
Unemployment rate: 3.1 percent
Country comparison to the world: 27